Warren Buffett: The Greatest Factor Investor of All Time?

How Much Alpha Did Warren Buffett Generate?

April 2019. Reading Time: 10 Minutes. Author: Nicolas Rabener.


  • A factor exposure of Berkshire Hathaway reveals structural factor tilts
  • Long Value, Size, Quality, and Low Volatility factors and short Growth and Dividend Yield
  • Warren Buffet generated little alpha, but is highly skilled at harvesting factor returns


The Vatican waits at least five years after a person died before it begins considering whether they are worthy of sainthood. The canonization process can take decades, even centuries, to complete as the church meticulously investigates the lives of candidates for saintly virtues, associated miracles, and other indicators of divine influence.

The investment industry would be well advised to follow a similarly rigorous process before elevating particular investors to superstar status. Many investors, Bill Ackman, David Einhorn, Bill Miller, and Neil Woodford, among them, have prematurely become icons before tumbling from the heights. Many more have risen, fallen, and already been forgotten.

Analyses of these star investors’ track records often reveal exposure to certain styles like Value or Growth. Since factors are just as cyclical as equity markets, track records tend to rise and fall with factor performance (read Smart Beta & Factor Correlations to the S&P 500).

Warren Buffett is among those few investors who has achieved iconic status and never relinquished it. The pedestal to which he has ascended has barely budged over the last several decades. Although investors have experienced perfectly normal periods of underperformance when investing in Berkshire Hathaway, Buffett has avoided the major pitfalls. His stellar track record is assured.

So from a factor perspective, what has driven Berkshire Hathaway’s outperformance?


While Buffett has controlled Berkshire Hathaway (BRK.A) since 1964, his track record over roughly the last three decades offers a robust enough sample size to draw some conclusions about what has c